Tiêu đề FM Answer Test 2 Key-combined (1).pdf ✅

FINANCIAL MANAGEMENT – CA INTER Bridge Test Series – Sept 25 Test - 2 [1] Suggested Answers/ Hints PART I 1. (c) 18.65%, 16.58% Ke under two approaches Calculation of Ke (Using Gordon’s Model) Ke = D1 P0 + g Share Price has grown from 150 to 301 in 5 years, 150 (1 + g)5 = 301 => (1 + g)5 = 2.01 Therefore, g = 15%, (From Annuity table – Re 1 after 5 years becomes ` 2.01 at rate of 15%) D1 = 8 + 15% of 8 = 9.2 Po = Average of 52 weeks High price in last 5 years Po = (195 + 210 +252 +325 +280) / 5 = 252.40 Ke = 9.2 / 252.40 + 0.15 = 18.65% Calculation of Ke (Using CAPM) Ke = Rf + (Rm – Rf) X Beta = 8 + (11 x 0.78) = 16.58% 2. (a) 17.82% Overall Ke for the company Approach Cost of Equity (k) Weight (w) K x w Gordon’s 18.65% 0.6 11.19% CAPM 16.58% 0.4 6.63% Total Ke = 17.82% 2 M 1 M